How Privatization Increases Inequality Section 3: Privatization of Critical Social Safety Net Services

How privatization increases inequality Section 3: Privatization of critical social safety net services In the Public Interest · September 2016 inthepublicinterest.org | Democracy, shared prosperity, and the common good Download full report at bit.ly/PrivatizationInequality Executive summary nequality in the United States, which began its most recent rise in the late 1970s, Icontinues to surge in the post–Great Recession era.1 During similar eras—such as the New Deal—many of the public goods and services we value today were created to deliver widespread prosperity. But the way in which cities, school districts, states, and the federal government deliver things like education, social services, and water profoundly affects the quality and availability of these vital goods and services. In the last few decades, efforts to privatize public goods and services have helped fuel an increasingly unequal society. The report, How privatization increases inequality, examines the ways in which the insertion of private interests into the provision of public goods and services hurts poor individuals and families, and people of color. In the Public Interest’s analysis of recent government contracting identifiesfive ways in which government privatization disproportionately hurts poor individuals and families, each of which is explored in greater detail in the report. This section of the report, Privatization of critical social safety net services, describes how programs that provide and deliver critical support to the poor are often subject to privatization experiments, many times with tragic results. Because these programs assist those who have little to no political power, these programs are low hanging fruit for privatization. The complex social problems faced by families and children who utilize services like food assistance (SNAP) and Medicaid are difficult, if not impossible, to address using a privatization model, as the need to help recipients with difficult problems and a contractor’s interest in extracting profits from the service are often incompatible. Download the full report at bit.ly/PrivatizationInequality. inthepublicinterest.org | How privatization increases inequality 2 Introduction he magical thinking of privatization has no more devastating consequences Tthan when it’s applied to those living on the margins. State and local governments are outsourcing important functions related to programs that involve poor individuals and families. Unfortunately, such programs are low hanging fruit for privatization efforts, as they affect only those who have little to no political power. The impact of privatization on families struggling at or below the poverty line can be tragic. The critical social services examined in this section, such as child foster care services, welfare services, the distribution of food assistance and other social safety net funds, Medicaid provision, and child support services have increasingly become privatized in many jurisdictions, as contractors take over important aspects of these programs. But the complex social problems faced by families and children who utilize these services are difficult, if not impossible, to address using a privatization model. Providing in-depth assistance that truly helps people climb out of poverty often cannot be captured in a contracting structure. Many of social services contracts have financial incentives that—even if inadvertently—perpetuate cycles of poverty and divert money from critical programs toward corporate profits. Recent research that explores how privatization has impacted the provision of social services found that while many performance-based contracts attempt to require greater accountability by focusing on quantifiable metrics, this approach has its limitations. It has negatively impacted the relationship between front-line workers and clients in need of assistance, and ultimately, the ability of workers to help clients in a real and sustainable way.2 In interviews with researchers, front-line social service workers explained that contracts that require adherence to specific metrics can overly standardize provision of care for people with unique needs, instead of address root causes of social issues. Furthermore, contractors may feel pressure to meet certain metrics or performance targets by engaging in practices that favor more easy to serve people (known as “creaming” or “cherry picking”), or providing minimal services to those who have more difficult or complex problems.3 In this changing landscape of social service provision through the increased use of outcome- based contracting, front-line social service workers report that their professional discretion and judgment has been limited. This contributes to a deskilling of the workforce, as contractors try to separate functions that require judgment from those that are perceived as more routine,4 as the child support discussion below illustrates. However, this effort to “streamline” social service provision, while it decreases labor costs, impacts the quality of the relationship between social service providers and their clients. As one front-line social service provider explained to researchers, “Work that is not easily quantifiable—such as a focus on quality, creative problem solving, assessment and diagnoses, client engagement and the power of relationship building—is not recognized or valued. Yet these are the very tasks that are critical to making things happen and achieving successful outcomes.”5 Unfortunately, social services privatization has led to an environment where the culture and goals of social service provision have been corporatized to maximize company revenues at the expense of meaningful client assistance. inthepublicinterest.org | How privatization increases inequality 3 Combined with high caseloads, and the reduced autonomy of the social service worker profession, workers report low morale and high turnover, ultimately undermining the very missions of these critical safety net programs. Foster care ome states have experimented with contracting with private companies to run Scritical aspects of their child welfare systems, including foster care placement and monitoring of those placements. This introduction of private interests into child welfare services has had a profoundly negative and sometimes even deadly impact on the most vulnerable of kids. Research has established a strong association between poverty and involvement with the child welfare system, especially in urban areas.6 Furthermore, due to structural racism and other factors, these impacts disproportionately affect children of color. Researchers have found that Native American, African American, and Latino children in certain states are, compared with white children, removed from families at higher rates once identified by child protective services. Children of color also stay in foster care for longer periods, experience more placement moves, and exit the foster care system without permanence, while their parents receive fewer services.7 This means that the negative impacts of child welfare privatization are adversely felt by children from poor socioeconomic backgrounds, whose families have very little voice in what happens to their children once they enter foster care. Child welfare contracts are simply unable to capture the complex dynamics and varied circumstances of those in need and subsequently direct the private provider to make complicated decisions regarding children’s lives. Payment from the government to the contractor must rely on a certain set of metrics, and for companies providing foster care services, the number of foster parents on their list and their ability to place children quickly into foster homes are the keys to maximizing revenues. Roland Zullo, a researcher at the University of Michigan who has studied the privatization of foster care, explains, “Given that every foster parent represents potential revenue, an agency may be more likely to overlook sketchy personal histories or potential safety hazards. There’s little incentive to seek out reasons to reject a family, to investigate problems after children are placed, or to do anything else that could result in a child leaving the agency’s program.”8 This contracting model puts pressure on caseworkers to place children in homes with little vetting and oversight, housing already vulnerable kids in dangerous situations. This dynamic has played out in private foster care placements throughout the country. For example, states including Texas, Georgia, Massachusetts, and Ohio have contracted with the publicly traded corporation, Mentor, to perform critical services such as screening, training, and overseeing foster parents, and the outcomes of that decision have been detrimental to the well being of many children. In 2015, Mentor reportedly had 4,000 inthepublicinterest.org | How privatization increases inequality 4 children in its care in 14 states, making it one of the largest companies in the foster care industry. In its fiscal year ending September 2015, the company had net revenue of$1.36 billion and profits of $3.1 million.9 Mentor was the subject of a 2015 indepth investigation by the media outlet Buzzfeed, which reported on numerous instances of children being neglected, abused, and even murdered by foster parents that the company had recruited and were supposed to oversee. For example, in Texas, Mentor sent 2-year-old Alexandria Hill to live with foster parent Sherrill Small, after she had been removed from another Mentor foster home where

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